Fairness views and redistributive policies
"Cutthroat Capitalism versus Cuddly Socialism: Are Americans More Meritocratic and Efficiency-seeking than Scandinavians?" (with B. Tungodden and A. Cappelen), 2016.
There is striking variation in income inequality and redistributive policies across the developed world. To study whether cross-country differences in social preferences may contribute to explain this variation, we conducted the first ever large-scale international social preference experiment, with nationally representative samples of participants from the United States and Norway. We find that Americans are significantly more accepting of inequality than Norwegians, even when making distributive choices in identical situations. This difference in inequality acceptance between the two countries reflects a difference in fairness views, not a difference in the importance Americans and Norwegians assign to fairness relative to efficiency. We further show that distributive choices in the experiment are strongly associated with attitudes towards redistribution in society. Overall, the study provides novel insights into international differences in social preferences, offers new causal evidence on how fairness and efficiency considerations shape distributive choices, and introduces a new approach to conducting large-scale experiments with nationally representative samples.
"Fairness and the Development of Inequality Acceptance" (with A. Cappelen, E. Sørensen and B. Tungodden), Science, 328(5982), 1176-1178, 2010.
Fairness considerations fundamentally affect human behavior, but our understanding of the nature and development of people’s fairness preferences is limited. The dictator game has been the standard experimental design for studying fairness preferences, but it only captures a situation where there is broad agreement that fairness requires equality. In real life, people often disagree on what is fair because they disagree on whether individual achievements, luck, and efficiency considerations of what maximizes total benefits, can justify inequalities. We modify the dictator game to capture these features and study how inequality acceptance develops in adolescence. We find that as children enter adolescence, they increasingly view inequalities reflecting differences in individual achievements, but not luck, as fair, whereas efficiency considerations mainly play a role in late adolescence.
"Measuring Unfair (In)equality" (with A. Cappelen, J. Lind, E. Sørensen and B. Tungodden), Journal of Public Economics, 95(7-8), 488-499, 2011.
This paper extends the standard framework of inequality measurement to allow for a distinction between fair and unfair inequalities. We introduce the unfairness Lorenz curve and the unfairness Gini, generalizing the standard Lorenz curve and Gini. Within this more general framework, we study the implications of responsibility-sensitive theories of justice for the evaluation of the income distribution in Norway from 1986 to 2005. We find that both the pre-tax and the post-tax income distributions have become less fair in Norway, even though the standard Gini for the pre-tax income distribution has decreased in the same period. Two trends explain this development: the increase in income share of the top percentile and the change in the situation of females in the labor market. The concentration of income at the top of the distribution contributes both to increased unfairness and increased inequality, whereas the increase in female working hours and level of education primarily contributes to a reduction in inequality. Thus, the latter effect dominates for the standard Gini and the former effect for the unfairness Gini. Furthermore, we find that the increase in post-tax unfairness is even larger than the increase in pre-tax unfairness, which shows that the tax system in Norway contributes less to eliminating unfairness in 2005 than in 1986.
"Equalizing Income versus Equalizing Opportunity - A Comparison of the United States and Germany", Research on Economic Inequality, 18, 2008.
Germany has lower post-tax income inequality than the United States and hence is doing better according to a strict egalitarian fairness ideal. On the other hand, the United States is doing better than Germany according to a libertarian fairness ideal, which states that people should be held fully responsible for their income. However, most people hold intermediate (responsibility-sensitive) views, and this paper studies fairness of the income distributions in Germany and the United States according to these views. We find that only if peoples’ preferences are characterized by substantial degree of individual responsibility, the United States is considered less unfair than Germany.
"Fairness and Family Background" (with A. Cappelen, K. Salvanes, E. Sørensen and B. Tungodden), forthcoming, Politics, Philosophy, and Economics.
Fairness preferences fundamentally affect individual behavior and play an important role in shaping social and political institutions. However, people differ both with respect to what they view as fair and with respect to how much weight they attach to fairness considerations. In this paper, we study the role of family background in explaining these heterogeneities in fairness preferences. In particular, we examine how socioeconomic background relates to fairness views and to how people make trade-offs between fairness and self-interest. To study this we conducted an economic experiment with a representative sample of 14-15 year-olds and matched the experimental data to administrative data on parental income and education. The participants made two distributive choices in the experiment. The first choice was to distribute money between themselves and another participant in a situation where there was no difference in merit. The second choice was to distribute money between two other participants with unequal merits. Our main finding is that there is a systematic difference in fairness view between children from low socioceconomic status (SES) families and the rest of the participants; more than 50 percent of the participants from low SES families are egalitarians, whereas only about 20 percent in the rest of the sample hold this fairness view. In contrast, we find no significant difference in the weight attached to fairness between children from different socioeconomic groups.